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October 13, 2011 <br />Number of Partial Inspection this Fiscal Year: 2 <br />Number of Complete Inspections this Fiscal Year: 2 <br />C- 1981- 018/Deserado Mine JRS <br />PROCESSING WASTE /COAL MINE WASTE PILES (cont.) - Refuse pile RP -5a was well graded and <br />compacted at the time of the inspection. The pile has positive drainage and no water was pooling on the surface. <br />Deserado was grading coarse material from several piles into the outslopes to fill in rills and help stabilize them. <br />ROADS — Rule 4.03 Construction 4.03.1(3)/4.03.2(3) Drainage 4.03.1(4)/4.03.2(4) Surfacing and <br />Maintenance4.03.1(5) and (6)/4.03.2(5) and (6) Reclamation 4.03.1(7)/4.03.2(7): <br />- The main haul road from the prep plant bench to the refuse piles was well graded and stable at the time of the <br />inspection. There was no rutting on the road and no erosional problems were noted. <br />- The conveyor corridor road runs from the facilities area to the loadout. The road was well graded and stable. <br />There were no erosional problems noted along the length of the road at the time of the inspection. <br />- The road spur to RS #6, nitrogen injection well N9 -62 and GVB LWB12 -1A was stable at the time of the <br />inspection. The road was just constructed for the drilling. There was some rutting on the road but it was not a <br />problem at this time. Deserado will still be using this road spur for equipment to access the pad for RS #6 to drill <br />it. <br />- The road spur to the B -Vent shaft was well graded and stable at the time of the inspection. No erosional <br />problems were noted on the road. <br />- The road spur to nitrogen injection well N10 -26 and GVB LWB12 -2 was stable at the time of the inspection. <br />The road was just constructed for the drilling. There was some rutting on the road but it was not a problem at this <br />time. <br />SUPPORT FACILITIES - Rule 4.04: <br />- The pad for the B -Vent shaft was stable at the time of the inspection. The pad is covered with gravel and there <br />were no erosional problems noted. <br />- The B -Vent shaft #3 pad has not yet been covered with gravel. Deserado is still filling and sealing the annulus <br />with cement and gravel. Scott did not anticipate that this work would be completed this year. Following this, the <br />mud pit will be filled in (it is being used for wash down water for the cement trucks) and the pad will be pulled <br />back some. Overall the area was stable and looked like an active pad. <br />- As stated in the General Compliance section above, Deserado has completed its 2011 gob vent borehole and <br />nitrogen injection well drilling. During the inspection the pads for holes N9 -62, N10 -26, LWB12 -1A and <br />LWB 12 -2 were inspected. All of the pads were stable but were still active at the time of the inspection. The mud <br />pits for pads N9 -62 and LWB12 -1A have been filled but the other two mud pits have not. Deserado will probably <br />pull back all of the pads some and do some interim seeding to stabilize the pads. <br />- The WMVS and water tank bench area was stable at the time of the inspection. No erosional problems were <br />noted in these areas. <br />The substation and materials storage area (above the prep plant bench) was stable at the time of the inspection. <br />- Deserado was performing some maintenance to a water line by the transfer building south of the slot storage <br />building. They were excavating the area by the building with a backhoe. There was no disturbance to the adjacent <br />land. <br />Page 4 of 10 <br />